Netflix said a crackdown on password sharing among US subscribers will occur between April and June, slightly delaying a plan that has caused consternation among many of the streaming service’s subscribers.
Netflix said in its quarterly earnings report that it was “pleased with the results” of a paid password-sharing system it launched in four countries and planned to launch in the United States in the second quarter. The company had previously stated that it would be available by the end of March.
Backlash expected
The announcement that Netflix would no longer allow users to share their passwords has roiled the company’s fan base. The strategy represents a 180-degree turn for the streaming company, which previously encouraged password sharing to attract more viewers.
Netflix is looking to make more money from its existing subscribers as it competes for streaming viewers with Disney+, Hulu, Peacock, and Paramount+.
The company anticipates some backlash once shareholders are required to pay up.
“This will not be a universally popular move, so there will be disappointed current members,” co-CEO Greg Peters previously told investors.
That’s what’s happened every time Netflix has rolled out “paid sharing” in a country, according to the company, citing a “cancel reaction” to the program in Canada, New Zealand, Spain, and Portugal when Netflix first began charging password-sharers more.
“As a reminder, as we roll out paid sharing — and as some borrowers stop watching, either because they don’t convert to extra members or full paying accounts — near-term engagement, as measured by third parties such as Nielsen, will likely shrink modestly,” the company wrote.
However, it believes that this strategy will increase its membership over time.
According to Netflix, more than 100 million households worldwide share passwords with others.
The company clearly “wants to manage any fallout from the new [password sharing]strategy,” according to Jamie Lumley, the analyst at Third Bridge. “Whether the launch is delayed further in the coming months is a big question.”
